Best of 2009: Regulation

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The year 2009 was a traumatic one for financial regulators, no less than for the publicly traded companies and the accounting firms they oversee. Tarnished by revelations of excessive risk-taking (see the banking meltdown) and massive fraud (see Bernard Madoff), regulatory agencies faced the prospect of sweeping reform. In January President Obama chose Mary Schapiro as the new chairman of the Securities and Exchange Commission; she set about getting the agency’s house in order, naming Robert Khuzami as the SEC’s new director of enforcement. Meanwhile, lawmakers on Capitol Hill debated proposals for redesigning the entire U.S. financial-regulatory system. As the year came to a close, the Supreme Court was preparing to ponder the fate of the accounting firms’ overseer, the Public Company Accounting Oversight Board.

Amid the turmoil, we covered the issues that regulators were keenest on addressing, as well as the politics at the agencies and some surprising proposals (such as permanently exempting the smallest publicly traded companies from the auditor-attestation requirement of the Sarbanes-Oxley Act). The selection of stories below reflects the top regulatory issues that faced corporate finance chiefs in 2009.

A report says most restatements made on the sly have only a minor negative effect on net income. So, were the fixes even necessary, especially in light of complaints that investors are suffering from information overload?

At Senate hearings on her nomination as SEC chief, she says she’d immediately attack problems in the U.S. regulatory system and “reinvigorate” the enforcement staff. She may also slow down the IFRS roadmap.

What does the regulator most want to see in future financial filings? Recent comment letters suggest that the Securities and Exchange Commission has a keen interest in goodwill impairments, fair-value measurements, and credit-risk disclosures.